In California, The Ballot Box And The Market
by Seth Sandronsky
August 19, 2003
In California, the market has done many folks wrong. Just ask ordinary people trying to find and keep work that pays their bills.
The GOP, with Arnold Schwarzenegger the leading candidate, is blaming Governor Gray Davis for the market downturn. The campaign against him is gathering steam, as the gubernatorial recall election nears its Oct. 7 date.
Mr. Schwarzenegger says that he wants to improve the state’s commercial climate. Supposedly, he wouldn’t have allowed the mistakes of Davis’ budget director.
This individual chose to ignore the math of the stock market bubble, and the predictable plunge in capital gains tax revenue when (not if) the stock market soured. The sharp drop in capital gains tax revenue when the stock market dropped partly led to the state budget deficit.
Stock prices to corporate earnings ratios had reached historical highs during the late 1990s. Not that the Davis administration is unique in its market-friendliness to speculative investment trends.
The same chumminess can be found in journalists adverse to criticizing the market system that creates market bubbles that go pop in the night, and poverty amid plenty. All are just the normal workings of the market, doctrinally ignored as such by most professional journalists.
Cut to California in 2003. The 2001 recession, dot-com, stock and tech market meltdowns have left many firms and their workers high and dry.
Some Republicans claim that businesses are leaving the state due to its harsh government regulations. One example is rising costs associated with the state's workers’ compensation system.
Meanwhile, manufacturing declines in California as foreign goods are flooding into the state. Thank U.S. firms that have relocated production to low-wage countries such as China where workers earn a fraction of what Americans are paid.
What gubernatorial candidate in California is discussing such capital flight? Or the migrant labor that follows it?
Is any mainstream journalist posing such crucial questions to Davis or the recall candidates? If not, why?
The market for labor is central to the system. The vast majority of Californians work.
This political point is a non-starter for the state’s two parties of big business. But that only holds true in the future if many Californians limit their politics to voting.
In the gubernatorial debate between moneyed elites, the everyday struggles of people living in barrios, ghettos and weekly motels up and down the state is off the radar screen. GOP rhetoric about the state’s over-spending during the market bubble of the late 1990s is an obscenity when you take an honest, open look at the majority’s daily struggle to get by.
Their opinions are basically overlooked by both parties, which claim to act and speak in the general public’s interest. On that note, Mr. Schwarzenegger, if elected governor, has promised to “clean house” in the state capital of Sacramento.
Presumably, this housecleaning will eliminate the state’s deficit. We can be sure that Wall St. rating agencies will smile.
How will this budget-balancing happen? The GOP’s action entertainer candidate can turn to a fellow of Stanford University's Hoover Institution for one way to reduce the deficit.
“Mr Schwarzenegger's fame, his ability to command saturation media coverage and his standing as a tribune of the people all might enable him to cow the unions into submission,” Peter Robinson wrote in the Aug. 12 Financial Times.
Seemingly, the high wages and retirements of unionized public workers are a drag on the budget. Cutting spending on them will help the state to control its finances and restore businesses’ bottom lines.
In the Republican view, this fiscal policy will help to make the state’s economy grow. Once, of course, public employees earn lower paychecks and have leaner retirements.
The trend of public debt, and the ideological and political pressure to attack people’s living and working standards, is not just a “California thing.” To the contrary, such “global austerity” rules the political roost, powered partly by “fellows” from think tanks such as the Hoover Institute.
For instance in France and Germany, establishment politicians are pressuring public-sector workers to accept lower wages and smaller pensions. These elected officials claim to be pro-growth and fiscally prudent.
Where is the proof that slashing the buying power of the population will improve public finances? How exactly does that policy make private businesses prosper?
The fact of the matter is such austerity turns upside down what Keynes discovered about the market. That is the private economy needs government stimulus during market downturns to stay afloat and prop up ordinary people.
They are the people whose work has created private wealth, increasingly concentrated in too few hands. One result is slow/no growth, with the California economy a case in point.
I write as a recovering Democrat. In the mid-1970s I realized that in the U.S. electoral politics is a shell around the market.
It’s run by corporations who fund elections. These legal entities are the favored form of capital accumulation.
In California and across America, Democrats and Republicans since around 1976 have united to protect corporations’ profitability at the expense of the majority. Under both parties, the cutting of social spending and taxes have been tools to help financial and industrial capital grow by shifting wealth from the many upward.
As author and scholar Jason Myers has noted, there has been a reversal of understanding how markets works that began with Democrat Jimmy Carter being elected president in 1976. Subsequently, living and working conditions have become increasingly precarious for more Americans.
Elections have facilitated this process. In America, a powerful master class has gained more and more wealth, though many people have been unable to see this.
This is a striking feature of U.S. political culture. Author Gore Vidal has said that the way U.S. rulers stay out of sight is one of the greatest political stunts of all time.
In California today, the GOP’s strongman candidate for governor is trying to capitalize on ordinary people’s expectation of government protection from the market. It is understandable for them to look to politicians for relief from the market downturn hammering the state.
Electoral politics is an ideology that helps to prevent people from seeing their connection with others in reproducing the system. Powerful institutions urge them to instead view the market as a thing apart from their daily lives.
One example of this was news reports that markets were or were not coping with the recent electrical blackout in the Northeast and Canada. Against that backdrop, the California recall election is more (or less) a response to the current market crisis of electricity deregulation being framed in fiscal terms.
As I see it, electoral politics are the equivalent of rearranging deck chairs on the Titantic of our time. The implications of this for real democracy could hardly be more momentous, beyond the outcome of California’s recall election.
Seth Sandronsky is a member of Peace Action and co-editor with Because People Matter, Sacramento’s progressive paper. He can be reached at: email@example.com.